By Vincent Wen    Photo：CANVA

The shipping market has remained sluggish recently. Although certain trade lanes have shown signs of increasing freight rates, overall market uncertainty remains high. Shipping industry sources from Taiwan and Tianjin indicate that freight rates may rise in April. However, reports from the Shanghai market suggest the opposite, indicating that prices could decline further. Additionally, former U.S. President Donald Trump has once again raised tariff concerns, adding uncertainty to global trade and further affecting market sentiment in the shipping industry.

Cargo Volume Remains Low, Market Supply and Demand Imbalance

The overall market cargo volume has yet to show a significant recovery, mainly due to the global economic slowdown and weak consumer demand. Shipping companies generally report that even as the second quarter approaches, demand recovery is slower than expected, leading to a persistent issue of excess shipping capacity.

Diverging Freight Rate Trends in the Asia-Pacific Market

Optimism in Taiwan and Tianjin: Several shipping companies report that freight rates are expected to rise in April, possibly due to adjustments in shipping routes and supply control by carriers.

Pressure on the Shanghai Market: Unlike Taiwan and Tianjin, reports from Shanghai indicate that freight rates may continue to decline, likely due to an oversupply of containers and weak export demand.

U.S. Trump's Tariff Concerns Increase Market Uncertainty

Former U.S. President Donald Trump has once again brought up tariff-related issues, raising concerns in the market. If the U.S. government adjusts tariffs on Chinese goods, it could impact the flow of import and export trade, thereby affecting the transpacific shipping market. This uncertainty may lead businesses to reduce import orders, further suppressing market demand.

U.S. Military Strikes on Yemeni Rebels Escalate the Red Sea Crisis

The U.S. recently launched a large-scale military strike against Yemeni rebels to deter attacks on commercial vessels in the Red Sea. However, this move has further intensified market uncertainty, leading to two possible extreme scenarios—either an escalation of the Red Sea crisis or a swift resolution. Both scenarios will have drastically different impacts on the shipping industry.

If the U.S. military fails to quickly suppress the Yemeni rebels and the conflict escalates, shipping risks in the Red Sea will rise significantly, forcing more shipping companies to reroute around the Cape of Good Hope, thereby increasing pressure on the global supply chain.

On the other hand, if the U.S. succeeds in swiftly controlling the rebels, restoring safe passage through the Red Sea, the shipping market may return to normal. However, this would expose the issue of excess shipping capacity in the global market, making it difficult for freight rates to rebound in the short term.

Market Outlook

Increased Short-Term Freight Rate Volatility: Due to the imbalance between supply and demand, freight rates across different trade lanes may continue to diverge.

Policy Impacts Must Be Monitored: Changes in U.S. tariff policies will directly affect China and the global shipping industry, requiring companies to stay alert to policy developments.

Capacity Adjustments Are Key: If shipping companies further reduce capacity, freight rates may find support in the second quarter.

The global shipping market is at a critical juncture, with geopolitical tensions and economic uncertainties shaping its future trajectory. Industry players must stay agile to navigate the challenges ahead.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.